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Property Management – Granada Hills

GRANADA HILLS PROPERTY MANAGEMENT

Commercial Property Managers – Handling Lease Defaults in Your Tenant Mix

In this property market many tenants are under pressure in their business and this creates some extra situations of lease default. Invariably and most commonly tenants avoid paying rental and then leave the premises when you least expect it.

The point of this article is that you as the property manager or landlord representative should watch the occupancy problem closely so the default is either avoided through negotiation or controlled with the least amount of financial loss for the landlord. Staying close to your tenants is really important. In this way you can deal with the occupancy pain before it becomes an occupancy disaster. In larger Retail Properties with lots of tenants, the impact of a vacancy can be filled across many tenancies. All the more reason for you to closely monitor all your tenants, and meet with them regularly to discuss their needs and wants in property occupation.

Nobody likes or wants a lease default, but they do happen and it is the lease that will provide the guidance and protection for the landlord. A specifically designed and well written lease is of high value to a landlord investing in commercial or retail property.

I have said it so many times before, and it is worth repeating, that a solicitor prepared specific lease is worth every dollar spent in its preparation. In some locations, a cheaper variety of generic lease is available for landlords to use at minimal or no cost. Unless the property is as basic as an industrial shed, the generic leases are quite irrelevant to a professional portfolio investor and landlord. Generic leases create more problems than they are worth.

If you are a commercial property manager, it is best to influence your clients towards a good property experienced solicitor to help with all lease documentation creation and implementation.

So let’s go back to the issue of handling lease defaults. Here are some ideas to help your actions and considerations.

The lease itself will have a mechanism for handling lease defaults. For this reason you must read the lease comprehensively and understand how it works in such situations. The lease will tell you exactly what has to occur within particular time frames to exercise the landlord’s rights in the lease default.
In some cities and locations, it is common for property legislation to also impact the activities and mechanisms of lease occupancy. Retail Property is a case in point and is frequently subjected to special lease legislation and laws. If you are working with Retail Property, it is essential to understand these extra factors.
Accurate information and precise record keeping will assist the process of default rectification or negotiation. It is essential to document all discussions, claims, and statements made by the tenant and the landlord. These records can later be used as evidence in any legal proceedings to rectify or process the default.
It pays to have the landlord’s solicitor represent the landlord in the default dispute. In this way the solicitor can accurately implement the legal provisions of the lease and the local property laws. The fees for the solicitor involvement can usually be charged to the tenant as part of the financial claim made in the default dispute.

Far too many property managers try to implement the default process without sufficient lease knowledge and experience. This can put the landlord at odds with documentation and local property laws. When in doubt, always seek a good solicitor to help the process

John Highman is an experienced Commercial Real Estate Agent, International Speaker, and Sales Coach.

Since 1946 the Carnahan name has had a reputation for honest and ethical Real Estate Property Management services in the San Fernando Valley, Santa Clarita Valley, Burbank/Glendale, Los Angeles, Westside and Conejo Valley areas.

The reason for our success is helping owners like you when they need it. Below is a partial list of property management services we provide to help you protect your real estate investment.